The Societal Welfare Gains of Stainless Steel Recycling in Thailand

Fears of politically motivated trade disruptions have put Europe’s economic dependency on China at the heart of discussions in trade and industrial policy alike. We contribute to an evidence-based discussion of this dependency by systematically identifying the sectors and value chains which depend most on trade with China. To this end, we employ inputoutput techniques and the OECD’s Inter-Country Input- Output (ICIO) database to compute indicators of trade dependency. We take both direct and indirect dependencies along the value chains into account. Our results indicate that Central European nations and Germany are particularly dependent on trade with China. European industries which depend most on trade with China are textiles, electronics, electrical equipment, machinery, automotive, other transport equipment (e. g. airplanes), and water transport. The dependency on China is partly hidden if only direct imports and exports are taken into consideration. While the trade dependency is concentrated in manufacturing, a large fraction of jobs associated with exports to China are services jobs. In Germany, 658,000 jobs in services depend either directly or indirectly on exports to China. Our results can guide product-level research to identify individual products and value chains for which Europe is particularly vulnerable to disruptions in trade with China.